How might waiting to file for bankruptcy hurt my finances further?
Filing for bankruptcy is a big step, and often one that people avoid. While it may seem natural to put off filing for bankruptcy as long as possible, a new report from the Notre Dame Law Review reveals that waiting to file for bankruptcy can cost you. The report finds that the longer you avoid bankruptcy, when you are financially struggling, the greater your debt load will be. Our Ohio Chapter 7 bankruptcy lawyers explore the potential consequences of putting off filing for bankruptcy below.
Waiting Drains Your Resources
A report was released in the Notre Dame Law Review entitled “Life in the Sweatbox.” The report reviewed data from the Consumer Bankruptcy Project, which studies people who file for bankruptcy. The review looked to find out how long people remain in the sweatbox, which is defined as the period when potential filers are facing the depletion of their assets, debt collection lawsuits, and going without basic necessities in order to avoid bankruptcy.
In analyzing the data from thousands of filers, the report found that 66 percent of people waited to file for two years or more. Almost a third remained in the “sweatbox” for five years or even longer. Sadly, the study concluded that the longer people stay in the sweatbox and put off filing, the worse their financial situation becomes. It was found that long term strugglers have half the assets of other filers, face a higher debt to income ratio, and endure more debt collection lawsuits.
By putting off filing for bankruptcy, people make it harder for themselves to obtain a fresh start. With assets so depleted, it can be difficult to dig yourself out of the debt hole. Accordingly, it is important for potential filers to take a realistic look at their finances and take action when needed. If you reach the point that your debts equate to more than 40 percent of your income, you are in financial distress. Contact a bankruptcy lawyer for an analysis of your debts, income, and the best bankruptcy strategy for you.